UPDATED 16:34 EDT / AUGUST 26 2021

INFRA

TSMC will reportedly raise prices of advanced chips by 10%

TSMC Ltd., the world’s largest semiconductor foundry, is reportedly raising the prices of its most advanced chips by about 10%.

The company is also boosting the prices of less advanced chips by approximately 20%, according to the Wall Street Journal report that revealed the move today. The increases are expected to take effect later this year or in 2022.

TSMC manufactures chips for many of the world’s largest tech firms. Apple Inc. relies on the company to make the A14 Bionic system-on-chip that powers the newest iPhone 12 and the Apple Silicon processors inside Mac computers. Nvidia Corp. partners with TSMC to make graphics processing units. Even Intel Corp., which competes with TSMC in the chip manufacturing business, is working with the company to produce parts of its 100 billion-transistor Ponte Vecchio processor for artificial intelligence workloads.

According to the Journal, it’s believed that the upcoming price increases are part of an effort by TSMC to help alleviate the global chip shortage.

Raising prices should provide TSMC with additional capital that it can use to expand its semiconductor manufacturing capacity. Having more manufacturing capacity will allow the company to increase the supply of chips, which is currently exceeded by demand in some markets. 

In April, TSMC announced it would spend a hefty $100 billion on chip manufacturing and development over the next three years.

It’s also believed that raising prices could help ease the chip shortage in the shorter term. The reasoning is that making semiconductors more expensive may lower demand in some parts of the market and thus free up manufacturing capacity for companies that most urgently need new silicon. 

A shortage of the processors used in cars has recently forced several automakers to scale back operations at some of their plants. Earlier, it was reported that production of Apple’s newest MacBook Pro and MacBook Air laptops has experienced delays because of processor procurement challenges. The rate at which iPad can be manufactured reportedly slowed at one point as well for similar reasons.

Today’s report didn’t provide much information on what advanced chips will be affected by the 10% price jump and which less advanced chips are expected to become 20% more expensive. However, it’s safe to assume that the chips powering Apple’s newest mobile devices and Macs fall into the advanced category, meaning they will see a 10% price increase. That’s because the five-nanometer process on which Apple’s chips are made is the newest and most sophisticated operated by TSMC.

TSMC says that chips produced with its five-nanometer process can provide 15% better performance than previous-generation silicon while consuming the same amount of electricity. Alternatively, the chips can provide the same performance while using 30% less power.

The company is currently working to launch a new set of chip production lines that will use even more advanced three-nanometer technology. Apple and Intel are said to be among the first customers of the technology. According to TSMC, three-nanometer chips will provide up to 15% more performance than their five-nanometer predecessors using the same amount of power, or provide the same performance using 25% to 30% less electricity.

Photo: Unsplash

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